Honda profit PLUNGES by 40 PERCENT in third-quarter on easing global car demand

Friday, February 1, 2019
By Paul Martin

HONDA reported a slump of 40 percent in operating profit for October to December, missing market expectations as the Japanese carmaker felt the pinch of easing global demand.

Fri, Feb 1, 2019

Honda Motor Co Ltd recorded profit of 170.1 billion yen (£1.19 billion) for the three months, down from 284.5 billion yen (£1.99 billion) in the same period a year earlier. The carmaker kept its full-year profit forecast at 790 billion yen (£5.55 billion). However, this is under the assumption the domestic currency will trade around 111 yen to the US dollar through March 31, from a previous forecast for 110 yen. An overall slowdown in demand for cars is believed to have been behind the weaker profit.

Another factor was keeping up with rivals with heavy investment in self-driving and low-emission vehicle technology.

Honda’s global automobile sales were given a helping hand by rising sales at home and in Asia, with the the number of cars coming in at 1.41 million vehicles in October to December, versus 1.34 million a year earlier.

The Japanese car giant sold 498,000 units in North America during the period, up from 491,000 a year earlier, bucking the trend of slowing demand in the US.

But profitability took a hit from an increase in selling incentives, the company said.

In China, Honda sold around 1.43 million vehicles in 2018, down slightly on the previous year.

This month it was revealed that Honda will cease production for six days in April at its Swindon plant due to border disruptions expected from Brexit.

Honda, who invested £200million in its Swindon hub, said in a statement: “Honda of the UK Manufacturing Ltd has been assessing how best to prepare for any disruption caused by logistics and border issues following the UK leaving the EU on 29 March 2019.

“To ensure Honda is well paced to adjust to all possible outcomes, we are planing six non-production days in April 2019.

“This is to facilitate production recovery activity following any delays at borders on parts.

“These contingency provisions have been put in place to best mitigate the risk of disruption to production operations at the Swindon factory.”

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